WASHINGTON -- U.S. District Judge Colleen Kollar-Kotelly said Monday she was
pleased with the results of the first status report on Microsoft's
compliance progress under its landmark 2002 antitrust settlement between the
company and the Department of Justice (DOJ).

"On the whole, it is a positive report. We have a system that's in place
that's moving along," Kollar-Kotelly, who presided over the settlement and
is charged with its enforcement, said in a brief open court session.

The report is part of semi-annual status updates mandated
by the settlement agreement over antitrust violations, and was written by both the DOJ and Microsoft .

The report particularly notes Microsoft's progress in reaching agreements to
license key parts of its operating system to competitors. The settlement
requires Microsoft to make available licenses to communications protocols on
reasonable and nondiscriminatory terms.

Microsoft identified more than 100 protocols for license and developed a
program known as the Microsoft Communications Protocol Program (MCPP). Under
the program, Microsoft provides licensees with technical documentation that
describe each communication protocol, as well as licenses to Microsoft's
relevant patents, copyrights and trade secrets pertaining to the licensed
Microsoft technology.

According to the report, the technical documentation that Microsoft
developed comprises more than 5,000 pages and was produced by approximately
ten technical writers working full-time for nine months.

The report states that the DOJ received "numerous" complaints about the
initial MCPPs being "overly stringent."

In response, Microsoft has eliminated requiring potential licensees sign a
non-disclosure agreement in order to review the licensing terms and improved
the terms regarding the timing of technical disclosures so that licensees
are able to obtain information at the same time as other licensees and
Microsoft partners.

In addition, the report notes, "Microsoft is undertaking changes to the
MCPP's royalty structure and rates, which will result in further changes to
the licensing terms. The report adds, however, the DOJ remains "concerned
about the royalty structure and rates proposed by Microsoft."

Overall, the report states that the DOJ has received 194 complaints about
the settlement agreement, Microsoft's compliance efforts or the government's
enforcement of the agreement. Out of those, the DOJ has classified 18 of the
complaints as substantive that required some manner of investigation. The
majority of the complaints focused on the MCPP.

Kollar-Kotelly's blessing of the status report is another piece of recent
good legal news for Microsoft. Last month, the U.S. Court of Appeals in
Washington upheld Kollar-Kotelly's decision to approve the settlement negotiated between Microsoft and the DOJ in 2002.

Nineteen states had sued Microsoft for better
terms following the initial settlement. Massachusetts, the only state to not eventually reach an agreement with Microsoft, claimed Kollar-Kotelly erred in her decision in not barring Microsoft from tying software like its Web browser, e-mail client and media
player with its operating system.

Massachusetts state attorney Jesse Kaplan, who attended Monday's
hearing, told reporters the state has not decided if it will appeal the decision.